Get paid for what you do
Focus on What You Do Best— and Get Paid for It
Jack Keough, Editor/Associate Publisher -- Industrial Distribution, 10/1/2005
Less than 10 years ago, Jeff Pickelman, president of Northern Industrial Supply in Saginaw, Mich., realized that too much of his business was tied to one automotive customer. Worse yet, the customer had become a slow-paying, low-margin account even though the volume of sales was large.
So Pickelman decided to analyze his customer base, and found that many of them had one common denominator: they used air compressors and air power in their businesses. At that time, NIS had about $300,000 in sales as the result of leasing, selling and servicing air compressors. He saw a huge potential in that product area.
This year, Pickelman expects $3 million in sales from the air power sector of his business. How he and his employees achieved that goal is the subject of our cover story this month (p. 32) . Pickelman and his management team identified a growth area in which the company could charge a fee for its services.
'Getting paid for services you provide is key,' he told ID. Today, his company has certified air technicians on his staff who lease, sell and repair air compressors in addition to selling power transmission products and mill supplies.
Pickelman was successful in changing his company's culture, moving from a product-based company to one that includes services for which customers are willing to pay. It's not an easy transition. It requires a new mindset on the part of management as well as a change in salespeople, who must serve more in a consultative role than as sellers of products.
In a study done by Texas A&M University and published last month by Industrial Distribution, the authors pointed out how difficult it is to unbundle services and have customers pay for what they had been previously getting for free. Instead, they recommended that distributors focus on 'non-core' functions that firms must accomplish in order to support their core business. These would include functions such as repair services, materials handling, inventory management, and transportation.
That's exactly what Northern Industrial Supply has done to grow its air power business so successfully over the past decade. It's something you might want to consider.
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